Need of compliance culture among stock brokers

New Delhi: Sebi has announced a plan to expand Qualified Stock Broker (QSB) framework that will bring more brokers under enhanced obligations, a move aimed at bolstering the trust of investors in the securities market.

The decision will also help in strengthening the compliance culture among stock brokers. Now, the parameters of proprietary trading volumes, compliance and grievance redressal scores will also be taken into account, while classifying stock brokers as QSBs, according to a circular. At present, there are five parameters for classifying a stock broker under the QSB framework -- total number of active clients, available total assets of clients, trading volumes of the stock broker (excluding the proprietary trading volume of the stock broker), and the end of day margin obligations of all clients. The margin obligations exclude the proprietary margin obligation of the stock broker concerned in all segments. QSBs are required to meet various enhanced obligations and discharge responsibilities to ensure appropriate governance structure, risk management policy and processes, robust cyber security framework. In the circular announcing the enhanced QSB framework, Sebi said it is part of “measures to instill trust in securities market”.